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Docs: La. firm overstated storage for explosives

By HOLBROOK MOHR Associated Press

Posted:
02/19/2013 01:25:56 AM PST

Updated:
02/19/2013 04:35:12 PM PST

Click photo to enlarge

FILE - This undated file aerial photo provided by the Louisiana State Police via The Shreveport Times shows part of the smokeless explosive powder improperly stored outside Explo Systems Inc., a munitions dismantling facility at Camp Minden at Doyline, La. Documents reviewed by The Associated Press show Explo Systems Inc. misstated its storage capacity for dangerous materials when it sought a multimillion dollar Army contract in 2010.

A company with a multimillion-dollar military contract to dismantle explosives was so overrun with the dangerous materials, it was stored in overflowing containers and even among the trees at its facility. Just three years ago, the company told the Army it had plenty of space to safely store and recycle the material, according to documents reviewed by The Associated Press.

Those documents shed some light on operations at Explo Systems Inc. and what it told military officials long before a Louisiana town near the company's facility had to be evacuated out of fear of an explosion. The company told the military its plan was to take the explosives apart and sell off the material, according to those same documents reviewed by the AP.

An explosion last October led authorities to look more closely at Explo and its facility, which is operated on the Louisiana National Guard base near Doyline, La. When a trooper investigating the explosion went to the facility, he discovered a haphazard collection of dangerous material, leading to the evacuation of the town in northwest Louisiana known for as the backdrop for the TV series "True Blood."

It's not clear from documents and in interviews with authorities exactly how much space the company had to safely store the explosives. But three years ago, the company said it had plenty of room.

In a proposal to the Army on Jan.

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21, 2010, Explo Systems said it had "storage capacity for more than 70 million pounds of explosive material between our Louisiana and Kentucky storage locations," according to documents obtained by the AP through a public records request. Yet Louisiana authorities said the facility there could only hold about 10 million pounds and a Kentucky state official said the company did not have permission to store it in that state.

Stephen D. Abney, spokesman for the Army's Joint Munitions Command, said the plan was for Explo to resell the material, not store it. Asked if Explo Systems misled the Army and could face charges, Abney said only that an investigation was ongoing.

Company officials have not responded to numerous telephone calls seeking comment.

However, a Kentucky businessman with ties to the company said Explo mistakenly overstated its storage capacity by more than 60 million pounds.

Explo Systems took apart propellant charges—used to fire artillery rounds—and sold a chemical called M6 to companies that could use it for coal mine blasting, according to documents the company provided to the Army. It also sold other parts of the recycled propellant charges.

The arrangement meant the company could make money from the Army and buyers of the recycled components.

The Army gave Explo a $2.9 million annual contract in March 2010 to dismantle up to 450,000 propelling charges a year with options for renewal for four years. It's not clear exactly how much of the explosive material the company was able to sell.

Each charge contains 20.6 pounds of M6, according to Explo Systems' plan, meaning the company could take in nearly 9.3 million pounds each year under the contract.

At some point, the company ran out of storage room in Louisiana and in early 2012 asked to lease more space at the base, the Guard said. The company was turned down because it was about $400,000 behind on rent.

A state trooper following up on the October explosion discovered the improperly stored material, and the company informed the Army on Nov. 27 that Louisiana authorities wouldn't allow it to accept more explosives pending an ongoing investigation.

Doyline was evacuated because of concerns that any ignition—such as a lightning strike or a brush fire—could set off a massive chain-reaction blast.

"They certainly didn't want it to stop coming in. If they quit taking it, they lose that income," said Sheriff Gary Sexton in Webster Parish, where the facility is located on a Louisiana National Guard base called Camp Minden. Sexton has been involved since the evacuation and early stages of the investigation.

Abney said "it was the understanding" of Army representatives that Explo was going to sell M6 to Kentucky Powder Company—an explosives company with offices in Lexington and Mount Vernon in Kentucky—to be used in the production of blasting slurry for coal mines.

Explo sold Kentucky Powder 2.16 million pounds of M6 in July 2011 and its plan said it had "supply agreements with two major mining slurry manufacturers," according to documents obtained by AP.

R. Edward McGhee is president of Kentucky Powder Company, according to filings with the Kentucky Secretary of State's office. Business filings in Louisiana list him as a director of Explo Systems.

McGhee said in a telephone interview that Kentucky Powder hadn't bought M6 from Explo in more than a year because demand was down. He said the company doesn't store explosives for other companies.

McGhee said he spoke to Explo officials who told him the plan mistakenly said the company had 70 million pounds of storage and should have said 7 million. McGhee did not mention being listed as a director of Explo Systems and hasn't responded to subsequent telephone calls.

The plan said 70 million pounds at least three times.

Linda Potter, a spokeswoman with the Kentucky Department for Natural Resources, said neither company has permits to store Explo Systems' propellant.

"To store explosives or lease space for Explo, both Kentucky Powder and Explo Systems would need to obtain the appropriate permit from the Explosives and Blasting Division. Neither company currently holds this permit, nor did they in 2010," Potter said.

Demand for recycled M6 is down because of declines in coal mining. Factors include low natural gas prices, a mild winter and difficulty obtaining permits, said Bill Bissett, president of the Kentucky Coal Association.

Bissett said the coal industry really began to feel the effects in the first quarter of 2012. That would have been around when Explo asked the Louisiana Guard to rent more bunkers.

After the discovery of the improperly stored M6, the Guard let Explo Systems use an additional 22 bunkers, up from 78 it already had, but that still wasn't enough to store it. Louisiana authorities are still looking for bunkers to store the M6 that is now in buildings on the base.

Explo has been selling some of the material, but not as fast as authorities would like.

"In my personal opinion, I think they defrauded the military on their ability to store this material in Louisiana," Sheriff Sexton said.

The Army visited the Louisiana facility at least twice in 2010 after the propellant contract was awarded and two more times in 2011, according to Abney. Records showed no serious problems.

But this isn't the first time the company has come under scrutiny.

A series of about 10 explosions at the facility caused an evacuation of Doyline in 2006 and was cited for violations in West Virginia for its use of an old military explosive for coal mining in 2007.

And then there was the explosion in October.

"Oh God, I thought I was in Afghanistan," according to Doyline resident Gaytha Bryant, 56, who said the blast shifted her mobile home, causing thousands of dollars in damage. "There was this explosion, then the shaking, the grandchildren woke up screaming."